Bookkeeping Basics · Edmonton
The debits and credits cheat sheet you'll actually use.
Which side goes up, which side goes down, and why your bank statement seems to say the opposite. One table, one memory trick and six real examples.
By the Plum team- Updated Oct 2026
- 9 min read
- Debit means left side, credit means right side. That's all. Neither is good or bad.
- Assets and expenses go up with debits. Liabilities, equity and revenue go up with credits.
- Remember it with DEALER: Dividends, Expenses, Assets (debit) and Liabilities, Equity, Revenue (credit).
- Your bank statement uses the bank's point of view, which is why it looks backwards.
Debits and credits are where most people give up on bookkeeping. The words sound like they should mean "money in" and "money out," and they don't. This debits and credits cheat sheet fixes that with one table, one memory trick and six worked examples from a Canadian small business.
If you haven't read our guide to double entry bookkeeping yet, start there. It explains why every transaction has two sides. This post explains which side is which.
1What debit and credit really mean
In bookkeeping, debit (Dr) means the left side of an entry and credit (Cr) means the right side. They come from Latin words, and centuries later they still just mean left and right.
Whether a debit increases or decreases an account depends on what type of account it is. That's the whole trick, and it's why memorizing "debit = money in" leads people astray.
2The debits and credits cheat sheet
| Account type | Normal balance | Increase with | Decrease with | Examples |
|---|---|---|---|---|
| Assets | Debit | Debit | Credit | Bank, accounts receivable, equipment, prepaid expenses |
| Expenses | Debit | Debit | Credit | Rent, software, fuel, wages, cost of goods sold |
| Draws and dividends | Debit | Debit | Credit | Owner's drawings, dividends declared |
| Liabilities | Credit | Credit | Debit | Credit card, loans, accounts payable, GST/HST Payable |
| Equity | Credit | Credit | Debit | Owner's equity, share capital, retained earnings |
| Revenue | Credit | Credit | Debit | Sales, service income, commissions |
Why does it work this way? Go back to the accounting equation: assets = liabilities + equity. Assets sit on the left of the equals sign, so they live on the left (debit) side. Liabilities and equity sit on the right, so they live on the credit side. Revenue increases equity, so it's a credit. Expenses and draws reduce equity, so they're debits.
Contra accounts
A few accounts sit on the "wrong" side on purpose. They're called contra accounts, and they reduce the account they're paired with:
- Accumulated amortization has a credit balance and reduces the value of your equipment on the balance sheet.
- Sales returns and discounts have a debit balance and reduce revenue.
- Owner's drawings reduce equity, which is why they're a debit.
3Six worked examples
Say you're a freelance photographer in Edmonton, registered for GST. You charge 5% on your work, and you use one GST/HST Payable account the way QuickBooks Online Canada does: GST you charge is a credit, GST you pay is a debit.
1. A client pays $525 on the spot
That's $500 for the shoot plus $25 GST. The bank (asset) goes up, so debit it $525. Revenue goes up, so credit it $500. You owe CRA the GST, so credit GST/HST Payable $25.
2. You pay $42 for photo editing software
$40 plus $2 GST, paid from your bank account. Software expense goes up (debit $40). The GST you paid reduces what you owe CRA (debit GST/HST Payable $2). The bank goes down (credit $42).
3. You buy a $3,000 camera body on the business credit card
Plus $150 GST. Equipment is an asset, so debit $3,000. Debit GST/HST Payable $150 for the input tax credit. The credit card balance (a liability) goes up, so credit it $3,150.
4. You pay off the credit card
The liability goes down, so debit the credit card $3,150. The bank goes down, so credit it $3,150. No expense here: you recorded the camera when you bought it.
5. You transfer $1,000 to your personal account
As a sole proprietor this is a draw, not an expense. Debit Owner's drawings $1,000 and credit the bank $1,000. (In a corporation it would usually go to a shareholder loan account instead.)
6. You refund a client $105
That's $100 plus $5 GST for a cancelled session. Debit Sales returns (or the revenue account itself) $100, debit GST/HST Payable $5 because you no longer owe that GST, and credit the bank $105.
All six entries together
| # | Account | Debit | Credit |
|---|---|---|---|
| 1 | Bank | $525 | |
| 1 | Photography revenue | $500 | |
| 1 | GST/HST Payable | $25 | |
| 2 | Software expense | $40 | |
| 2 | GST/HST Payable | $2 | |
| 2 | Bank | $42 | |
| 3 | Camera equipment | $3,000 | |
| 3 | GST/HST Payable | $150 | |
| 3 | Credit card | $3,150 | |
| 4 | Credit card | $3,150 | |
| 4 | Bank | $3,150 | |
| 5 | Owner's drawings | $1,000 | |
| 5 | Bank | $1,000 | |
| 6 | Sales returns | $100 | |
| 6 | GST/HST Payable | $5 | |
| 6 | Bank | $105 | |
| Totals | $7,972 | $7,972 |
After these six transactions, GST/HST Payable has $25 in credits and $157 in debits, a net debit of $132. That means CRA owes you $132 for this period, mostly thanks to the camera. That's a real benefit of being registered, and it's exactly what your GST return would show. Our guide to GST registration covers when registering makes sense.
Quick reference: everyday transactions
| Transaction | Debit | Credit |
|---|---|---|
| Owner puts money in | Bank | Owner's equity (or shareholder loan) |
| Cash or card sale | Bank | Revenue, GST/HST Payable |
| Send an invoice | Accounts receivable | Revenue, GST/HST Payable |
| Customer pays an invoice | Bank | Accounts receivable |
| Pay an expense | Expense, GST/HST Payable | Bank or credit card |
| Receive a supplier bill | Expense, GST/HST Payable | Accounts payable |
| Pay a supplier bill | Accounts payable | Bank |
| Take out a loan | Bank | Loan payable |
| Loan payment | Loan payable, interest expense | Bank |
| File and pay GST | GST/HST Payable | Bank |
| Owner draw | Owner's drawings | Bank |
Notice the pattern: the bank is debited whenever money comes in and credited whenever it goes out. If you can place the bank side, the other side is usually obvious.
4Debits and credits in QuickBooks Online
Most of the time you'll never type the words debit or credit in QuickBooks Online. When you categorize a bank transaction, create an invoice or enter a bill, the software works out both sides for you.
You'll meet them directly in two places:
- Journal entries. Choose + New, then Journal entry. Each line has a Debits and a Credits column, and QuickBooks won't save until they match.
- Reports. The Trial Balance and General Ledger reports show debit and credit columns. Our trial balance guide shows how to read one.
One habit that helps: when something looks odd in a report, open the transaction and view its journal. Seeing the actual debits and credits usually makes the mistake obvious within seconds.
5Common mistakes with debits and credits
- Thinking "credit" means good. A credit to revenue is nice; a credit to your credit card account means you owe more.
- Reading the bank statement as your books. Flip it: a bank "credit" is a debit to your bank account.
- Reversing a refund the wrong way. A refund reduces revenue (debit), not an expense, unless you're refunding a cost you paid.
- Getting GST backwards. GST charged is a credit; GST paid is a debit. Swap them and your GST return will be wrong by twice the amount.
- Ignoring a wrong-side balance. A bank account with a credit balance (when you're not overdrawn) or an expense account with a credit balance is almost always a coding error.
6Practice in five minutes
Take any five transactions from your last bank statement and write the debit and credit for each, using the cheat sheet. Then check them against the transaction journal in QuickBooks. Do this a couple of times and debits and credits stop being a mystery.
Next on the learning path: the chart of accounts, which is the list of every account these debits and credits land in.
If you'd rather leave the debits and credits to someone else, Plum handles the books for owners across Edmonton, St. Albert and Sherwood Park, and we're happy to explain anything along the way. Book a short call to see how it works.
7Questions people ask
Is a debit good or bad in accounting?
Neither. Debit just means the left side of an entry and credit means the right side. A debit increases assets and expenses and decreases liabilities, equity and revenue.
Why does my bank call a deposit a credit?
Your bank statement is written from the bank's point of view. Your money is a liability for the bank, so a deposit increases what it owes you, which is a credit on its books. In your books the same deposit is a debit to your bank account.
What is a normal balance?
It's the side an account usually sits on. Assets and expenses normally have debit balances; liabilities, equity and revenue normally have credit balances. An account sitting on the wrong side is often a sign of a mistake.
Is GST a debit or a credit?
GST you charge customers is a credit to GST/HST Payable, because you owe it to CRA. GST you pay on business costs is a debit, because it reduces what you owe through input tax credits.
Do debits always have to equal credits?
Yes. Every journal entry must have equal debits and credits, and accounting software like QuickBooks Online won't let you save one that doesn't.
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Book a free 15-min callThis article is general information for Alberta businesses and isn't tax or legal advice. Rules and thresholds change, so confirm your situation with your accountant or CRA.